Commentary and analysis on markets, personal finance, and wealth building from a contrarian perspective. "I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting there and trying to dream it up all yourself. Nobody’s that smart."
— Charlie Munger

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Thursday, March 17, 2016

Mr. Lithium interview

I thought the recent 3x price run-up in China would be a
major point of discussion, but that point was dwarfed by concerns over lack of
supply. The overwhelming interest in lithium on the part of Australian
investors was also a bit of a surprise.

(skip)

Based on extensive meetings around the globe, are there
critical events on the horizon that could shake things up?

As long as China continues a reasonable level of support for
battery related initiatives and there is not a major global recession, I think
lithium ion battery demand for non-consumer applications has reached a
tipping-point, ensuring robust lithium demand for the next several years.

Some are forecasting price increases of 10%+ per year for
a decade or more. What could disrupt the conventional wisdom of soaring demand?

The current US$20,000/Mt price in China already ensures
great profits for even the highest cost producers. I believe in market forces.
New spodumene capacity comes online more quickly than brine but if prices stay
at the high teens for five years, I believe you will see at least a brief
oversupply situation no later than 2024. As long as spodumene is a major
lithium source, price is not likely to return to US$6,000/Mt in the next
decade. Having said that, I do not believe 10% annual price increases for a
decade is even a remote possibility.

This is an interview with "Mr. Lithium" Joe Lowry. He has been involved in the lithium business, working with the larger producers and consumers of lithium for years. His insight into the current market is invaluable and confirms my thesis that lithium is a great place to be and will eventually end in a bubble for lithium stocks. You can follow Joe on twitter where he gives updates on the lithium market Joe Lowry on Twitter: @globallithium